Angel & Entrepreneur News

Loyalty links up to new payment card

One-card-fits-all rewards programme which keeps vital information secure is a hit for the hospitality industry

The idea behind technology startup Eftplus was born out of frustration that’s only experienced by an addict who’s been denied their “fix”. When self-confessed customer-rewards addict and all-round tech guy Julian Cox had to turn down a loyalty card offer because his wallet was already stuffed full of them, he realised he had stumbled on to what was probably a common first-world problem.

Together with his Eftplus co-founder, entrepreneurship masters student Marcus Hoefliger, he set about finding a solution.

“We asked ourselves what’s the one card we take out and use on a regular basis and the answer was our payment cards,” says Hoefliger. “Why couldn’t we just use our payment card as loyalty cards?”

The idea of linking payment cards to loyalty programmes is not new. Several companies have tried to do this before, Hoefliger says. But previous attempts have foundered as they failed to comply with strict Payments Card Industry (PCI) security standards, which are designed to prevent payment card details from falling into the wrong hands.

Unless you are a financial institution with bullet-proof security then storing or transmitting full payment card numbers is an absolute no-no.

Eftplus’ innovation was finding a way to identify transactions and use them to power a loyalty programme without breaking PCI rules.

“We managed to find a way to securely identify a card, who it belongs to and then reward them based on their activity,” Hoefliger explains.

Cox and Hoefliger discovered the raw data Eftplus needed was already available in the reports the bank-owned payment network provider Paymark was sending out to retailers.

These reports contained details of daily transactions including the merchant’s identifier and, critically, a stripped-down version of the customer’s card number.

Once Eftplus had persuaded some local Dunedin retailers to share this data, the company had all it needed to get its cardless loyalty programme service up and running.

Eftplus began by building a basic reporting tool, which would give retailers insight into how much their customers were spending and when.

Soon after, the fledgling company received a phone call from Paymark, New Zealand’s largest electronic payments provider.

“They had noticed we were redirecting data from merchants in Dunedin and wanted us to come up to Auckland ‘to have a chat’,” says Hoefliger.

After the Eftplus founders outlined their vision to Paymark’s senior managers, they were “right on board”, he says. “It was what we could do with the data; how we could bring it to life, that was what they were really interested in. It was a breakthrough moment for us.”

When Eftplus launched its loyalty programme in late 2011 it immediately proved popular with small businesses, especially firms in the hospitality industry.

Part of the attraction for customers is that it is “frictionless” compared with physical loyalty cards, says Hoefliger. “The customer just does what they usually do to pay for a beer or fix up a bill. They spend $200 on Friday night and then on Saturday morning they get a message on their phone that says: ‘Thanks for coming in last night, we appreciate your custom, here’s a voucher for $10′.”

Eftplus rapidly grew to 150,000 members and was processing around 14 million transactions, but to progress it needed capital and expertise, so it approached the Auckland-based Ice Angels investor network at the end of last year.

Eftplus immediately caught the eye of Ice Angel Peter Hall, a former ASB manager who had led the bank’s True Rewards loyalty scheme. Hall, who has since joined Eftplus as its investment director, says he was attracted to the firm because “it solves the major pain points in loyalty”.

Eftplus also picked up Ice Angel Steve Lobb, the founding general manager of the Fly Buys loyalty scheme, who also turned out to be a customer through a restaurant he owned.

Angels light the path for NZ start-ups

Leading American angel John Huston as well as experienced New Zealand investors Steve Saunders, Bruce Bartley and Rudi Bublitz, last week told a Tauranga audience of entrepreneurs why the start-ups should seek out angel investors.

“I was pretty stunned to hear about the size and vigour of the Tauranga angel group and since I was in the country I dropped by,” said Mr Huston, who was in New Zealand to speak at this week’s angel investor conference in Auckland.

“My desire is to help young ventures avoid a lot of mistakes that those of us who’ve been in business for many years have committed,” said Mr Huston.

Mr Huston added that he had experienced a 30 per cent death rate in his portfolio.

“Of the 50 companies, I have had eight large exits, so I am now in Nirvana. But even with these companies, they’ve all missed payroll a number of times – and these are the winners. If you have a first-time entrepreneur and you couple them with a seasoned angel who has seen a number of deals, I think you have a much more powerful combination and increase the odds for success.”

Bruce Bartley, who runs the Engine Room group in Taupo for entrepreneurs, said he had started a dozen businesses and was involved in six, including the Spidertracks GPS tracking app.

“The normal angel model of building a portfolio doesn’t work for me,” he said. “As an investor, if you’ve got a small amount in you can’t do anything, so I get a larger chunk of a smaller company so that I can step in and help it back on to the rails.”

Rudi Bublitz, born in Germany, opted for New Zealand because he liked the relaxed Kiwi style. He is a co-founder of a new group, Flying Kiwi Angels.

“In a typical angel what you’re looking for is someone who’s done it before, they’ve made enough money to invest and lose it all,” he said. “You want Angels that can share their experience and get you through.”

Steve Saunders, head of Tauranga’s Plus Group of agro-tech companies and a member of the Tauranga Enterprise Angels group, said he was an entrepreneur who invested in entrepreneurs.

“I love the passion of entrepreneurs,” he said.

Mr Saunders stressed the importance of staying connected worldwide and the importance for a New Zealand business to build global scale.

“You’ve got to get around the world and meet people,” he said.

He added that New Zealand had a golden ticket from a primary sector point of view because of its clean reputation.

“People want to be connected to what they eat. Safe food connectivity is our opportunity.”

Background

• American angel investor John Huston launched the first Ohio TechAngel Fund in 2004 with 50 investors, which became a founding member of the USA’s Angel Capital Association.

• Now with 340 members, OTAF is one of the world’s largest angel groups and recently launched its fourth sidecar fund at $7.3 million.

Angels seek new investments

Angel investors are still investing in New Zealand start-ups, pouring $23.1 million into new companies in the first half of the year and showing more appetite for new rather than follow on funds, as measured by the New Zealand Venture Investment Fund’s Young Company Finance Index.

That’s slightly down on the record $23.7 million in the first half of 2013 but shows that angel activity in the early part of the tech company pipeline is in good health, said NZVIF chief executive Franceska Banga, releasing the latest index update.

A trend this half year has been a shift back to new investment rather than follow-up money. Of the $23.1 million invested in the last six months, 53 per cent was follow-on investment and 47 per cent new compared to 80 per cent follow-on and 20 per cent new in the same period in 2013.

Angel Association chairman Marcel van den Assum said it was a little early to tell if it was a sustainable shift but could be a sign the market was maturing with investors saying ‘no’ to follow on investments when companies don’t meet milestones.

After almost two decades building his previous CAD design firm 4D into a global company with 200-plus staff, he sold his stake and last year relocated from the Philippines to Tauranga to look for a different lifestyle and new opportunities.

There he connected with Tauranga realtor and boatie Lex Bacon, who had come up with an idea for an electrically-powered trailer boat loader. After rigorous due diligence on the concept, Mr Symes became the majority investor in Balex Marine, which is developing and marketing Mr Bacon’s invention as the Automatic Boat Loader. Industrial design firm Locus Research has also taken an equity share in the company.

The ABL prototype won the Hutchwilco NZ Boat Show Innovative Product Award earlier this year, and Balex is currently engaged in an $800,000 series A fund-raising round with angel investors.

“I miss having my old executive management team of 10 people who were absolutely fantastic,” said Mr Symes.
“It’s difficult not to have those resources available, so that’s a change and a challenge. But I’m really enjoying it.”

Mr Symes grew up in Hawera, before going to boarding school at New Plymouth’s Francis Douglas Memorial College.

In the sixth form he took up a draughting cadetship with the local office of engineering consultancy Holmes Consulting Group, moved to the company’s Wellington headquarters, and later worked for his father’s company Valley Steel.

But the 1987 sharemarket collapse hit the construction industry hard and Mr Symes decided to go to Victoria University, where he got a BCA in accounting, commercial law and IT. To support his studies, he worked for himself. By the time he finished his degree, he had a staff of 15, so he decided to stick with the business and incorporated it as 4D.

He had met his wife Joanne, who came from Christchurch, as did two of his partners, so the business was rebased in the South Island city.

The business did well with New Zealand projects, and 4D also began working across the Tasman. The game-changer for the company came in the late 1990s. An Australian competitor offered the firm the opportunity to join it on the massive Olympic Dam Copper Project, if it committed to investing in the expensive CAD design programme XSteel (now Tekla), which had become available for the first time on PC.

Mr Symes and his wife were forced to turn to family and friends to come up with the $150,000 cost of five of the only 2000 software licences available worldwide.

“It was a ridiculous amount of money to find at the time,” he said. “But everything we achieved resulted from that.”

The software enabled 4D to develop highly-detailed 3D designs for steel structures, down to the nut, bolt, washer and weld placements, which could then be fed directly into computer-controlled machinery to cut, drill and punch out the steel components for the build.

“We started getting involved in mega projects in Australia and were then approached by a company in Nova Scotia, Canada, to work on projects in the USA.”

Over the next decade the company became 90 per cent focused on the North American market. But it was running into increasing problems getting skilled staff. After evaluating China, India and Indonesia, the company settled on the Philippines for an offshore site and opened an office in Manila in 2006.

“The thing with Paul was that he really took the time to try and understand the way things worked in the Philippines and the culture of the Filipinos as well,” said Richard Cullen, now managing director of Te Aroha-based Cullen Engineering, who was part of 4D’s Manilla management team in the early days. “They really respected him.”

But after the firm expanded its Manila office, the global financial crisis kicked in around 2008, forcing a massive restructuring.

“We had come off the back of some massive projects that had tied up a lot of people, then we found ourselves with nothing to do and a really bleak outlook,”said Mr Symes.

The Christchurch office was wound down, and the business based in Manila with total staff cut by 30 per cent to less than 90. The restructuring cut costs by 55 per cent and led to the company growing by 100 per cent over the next two years, with staff eventually building back up to 215 last year.

Meanwhile, 4D Global Group was merged into Australian company PDC Group in 2011, and went on to win a number of significant steel design projects, including the World Trade Centre 3 – which used 30,000 tonnes of steel, equivalent to one-third of New Zealand’s annual steel consumption – as well as the new Google headquarters. Mr Symes was eventually bought out in March 2013.

Michelle Malcolm, a partner with business adviser Crowe Horwath in Tauranga, said Mr Symes knew what he wanted to do and where he wanted to go.

“His past expertise in growing businesses and taking them to where he has, shows in everything he does,” she said. “I have total faith Balex will be a success because you don’t have too many people who have an entrepreneurial head like his.”

Easy fit for dedicated boatie
Getting involved in the Automatic Boat Loader was to some extent a no-brainer for Paul Symes, who is a dedicated boatie and keen beach catamaran sailor.

He was heavily involved during his stint in Manila with the Philippine Inter-Island Sailing Foundation, which runs regattas throughout the archipelago. A member of Phinsaf’s board of directors in 2012-13, he chaired the 2010 Philippines Hobie Championships, and the 13th Philippines Hobie Challenge last year.

“And I went up and sailed again in March,” said Mr Symes. “I love tropical sailing.”

Mr Symes bought an 18ft (5.5m) Nacra catamaran when he returned to New Zealand but sold it again, and is in the market for something smaller that can be easily sailed by one person.

He and his wife Joanne have two daughters, Alannah, 17, and Danielle, 12.

Outside help had a major impact
Paul Symes said that one of the critical moments in his business career came in 2005, when he learned the lesson of working “on not in” the business.

He engaged the business advisory group at PriceWaterhouseCoopers in Christchurch and worked with them to more effectively structure 4D’s governance, which included bringing in an outside chairman.

“I worked closely with PWC in terms of strategic planning, getting really diligent about it. And that was really instrumental in paving the way forward.”

Part of that process included looking hard at pressing issues of the time, such as the need to find skilled staff, and resulted in the decision to open an offshore site in Manila.

“And I don’t know how much the key to success is attracting the right people — I’ve had absolutely fantastic people working with me.”

Richard Cullen, now managing director of Te Aroha-based Cullen Engineering, who was formerly in 4D’s Manila management team, said Mr Symes was highly organised and motivated.

“He has the ability to motivate his team and to share the vision of the business with his team so that everyone’s going in the same direction,” he said. “He’s very good at dealing with people and very knowledgeable.”

Michelle Malcolm, a partner with business advisers Crowe Horwath, said Mr Symes was really well- informed and well-prepared. “His minutes for board meetings are probably the best I’ve ever seen,” she said.

Mr Symes paid tribute to the local business community for the support he’d received since relocating to Tauranga.

“They’ve put their hands up to help, which is humbling and refreshing,” he said.

“The secret of Tauranga’s success, when the rest of the regions are struggling, is that there’s such a vibrant group of people here that are absolutely passionate about making this a successful business community.”

Delivering data to farmers’ pockets

Angels support “mum-treprenuer” of the year, Bridgit Hawkins and her business Regen and in doing so help farmers make better, faster decisions to protect the environment and build better businesses.

These days farmers are as likely to have a smartphone or tablet in their hands as they are a dog at their heels.

As technology becomes an integral part of managing the land, Wellington entrepreneur Bridgit Hawkins is building ReGen, an enterprise texting daily data to farmers to take the guesswork out of key on-farm operations.

Startup driving cystic fibrosis drug to market

Andrea Miller is used to facing tough situations. As a senior army officer for 22 years, she’s faced all sorts of challenges, including a UN peacekeeping tour to East Timor. Now, as the chief executive of Auckland-based startup company Breathe Easy, she’s fighting for the 75,000 people around the world who suffer from cystic fibrosis (CF), including her 26-year-old daughter, Sarah.

CF is a chronic genetic illness that affects the lungs and digestive system. It’s debilitating and destructive, says Miller. “It’s a tough foe. Sadly the prognosis is really grim.

“It’s improving now, but the average life expectancy is still only in the 30s.”

Sufferers have thick and sticky mucus in their lungs, which settles and clogs the small airways and causes recurrent lung infections.

Miller’s partners in Breathe Easy are Professor Bob Elliott, who Miller first met more than two decades ago when he was her daughter’s paediatrician, and Auckland-based life sciences investor and champion Brent Ogilvie.

Through years of self-education, attending overseas medical conferences and completing an internship with the Cystic Fibrosis Foundation in the US, she’s gotten to know Elliott and Ogilvie pretty well, she says.

Breathe Easy came about after Professor Elliott invented a new drug called Citramel, which melts the biofilms or mucus obstructing the effectiveness of existing antibiotics and the patient’s own immune system in dealing with CF.

With the backing of Ogilvie’s life science investment company Pacific Channel, Ogilvie and Elliott formed Breathe Easy to develop Elliott’s findings into a useable product and bring it to market with Miller’s help.

Since then Breathe Easy has gained regulatory and ethical approvals for the crucial Phase I/IIa clinical trial to test its efficacy and safety. The trial is due to start in early 2015 at the Christchurch Clinical Studies Trust.

It’s potentially a huge breakthrough for the medical world and an important milestone for New Zealand’s medical innovation as this will be the first CF product to enter clinical trials that was invented here and will be manufactured here. “At Pacific Channel we look for both a high potential social good as well as high potential financial returns and Breathe Easy embodies both, very much,” says Ogilvie.

Pacific Channel and its network of angel (early-stage) investors have already pumped in “a few hundred thousand dollars” to get to this stage, says Ogilvie, but Breathe Easy needs another $1.5 million to complete the clinical trial to test Citramel and move the product forward.

It’s a lot of money, but the task is a little less daunting because CF is classified as an “orphan” disease – a disease that affects only a relatively small percentage of the population – and as such can get fast-track approval with important international regulators such as the US Food and Drug Administration (FDA).

“Drug development is tough, and doing it from New Zealand is very tough. However, the beauty of working on an orphan drug, where the market for the number of patients is obviously much smaller than something like heart disease, for example, allows for faster and lower-cost drug development,” said Ogilvie.

Running the clinical trials in New Zealand is also a lower-cost alternative to conducting the trials in Europe or the US, plus it has the added benefit of spreading knowledge and awareness about CF and the treatment possibilities among New Zealand’s medical fraternity, says Miller.

Breathe Easy also believes that Citramel may benefit those with diseases such as chronic obstructive pulmonary disease, which affects around 330 million people, so the potential is enormous, she adds.

“It’s a sensational story! Rather than the awful situation of having to sit and wait for the illness to take its toll, here we are getting up, taking action, and developing a medication that could be really helpful in the fight against CF.”

Borton & Sons Inc. Adds Koru, Rockit Apples to lineup

This season, Borton & Sons Inc., headquartered in Yakima, WA, plans to add two new apple varieties to its manifest. The company is a premium grower, packer and shipper of high-quality apples, pears and cherries with more than a century of industry expertise. The fourth generation of family members currently spearheads operations.

“We have started marketing two new varietals out of New Zealand with intentions in growing both here in Washington state,” said Lindsay Ehlis, part of the company’s sales and marketing team. “The first apple is the Koru. Along with Oneonta and New York Apple Sales, Borton Fruit has started marketing this unique variety in the United States. Consumer testing has proven to be overwhelmingly positive thus far. At this time, we are carrying limited volume out of New Zealand while commercial U.S. planting is under way.

“The second variety is the Rockit apple, which we are marketing here in the U.S. along with Chelan Fresh Marketing,” she continued. “These snack-sized apples provide a new healthy eating option on the go. The unique tubed packaging has already seen positive feedback from many industry veterans that have come in contact with the variety. Borton plans to start planting the Rockit here in Washington state next spring.”

Byron Borton, the company’s chief visionary officer, said conditions during the current apple production season have been favorable.

“The first varieties to come off the tree are Ginger Golds and Galas, which we have started picking this August,” he said. “We will be picking apples through November ending with our Cripps Pink/Pink Lady apples.

“Overall, quality is looking fantastic,” he commented. “Size will likely be up one full count across the state from normal years. The great weather early in the season made the apples jump out of the shoot. But perhaps the heat we have had the past three to four weeks may have slowed the sizing down a tad.”

Borton said the company is finalizing a new apple box “that will be one of the strongest in the industry. We have taken our approach to providing the market with the best fruit possible, and applied it to our full supply chain and packaging. This packaging investment ensures that the fruit will retain its superior quality when it arrives on customers’ shelves.”

The company markets apples under the “Apple Tree,” “Sno Chief,” “Yakima Chief” and “Sno Crisp” labels. “We do not grow organic produce, but do source some organics for our customers in small volumes to help fill when needed,” said Eric Borton, vice president of international sales and marketing. “Demand has grown some. But the greatest demand for apples still remains in traditionally grown fruit by a large margin because of its higher overall quality, yield and consistency.”

Borton Fruit markets apples to customers throughout the globe, and Eric Borton said, “We are continually seeking development of new markets and export opportunities.”

The company has a number of seasonal and nonseasonal marketing programs in place that have been highly successful. “One we will be focusing on in the next couple months will be our NFL Fuel Up to Play 60 program,” Ehlis said. “It’s great timing with the new school year beginning as well as the NFL kicking off. The program was designed to tackle childhood obesity by engaging youth to take action for their own health by implementing long-term, positive changes for themselves and their schools, starting with healthy snacks and foods and 60 minutes a day of exercise. This will be Borton’s third year being a part of this movement.”

On the facilities size, Ehlis said some improvements were made this past year. “We’ve implemented a new racking system to improve staging area at our main plant,” she told The Produce News. “This is allowing us to get ahead of orders and turn our truck loading times around much quicker. With an internal Loading Dock Analysis reporting process, we have improved the overall wait time at our facility by about 35 percent already, and are working toward making that an even better percentage. In addition to this staging and loading process, we’ve also designed a new truckers’ lounge for the drivers while they are here.”

Shuttlerock raises millions for North American boost

Another example of the excitement and cut through innovative, high-growth NZ companies can generate. Shuttlerock backed by Ice Angels and others who want to lift NZ higher is getting real traction in the US market.

Kiwi trailblazers plot success with mapping tool

Online research can be a messy process. Anyone who’s ever searched for something online, only to find themselves hours later, hazy and buried under dozens of open browser tabs, will have some idea of the impetus behind Wellington software startup Twingl.

Trailblazer, Twingl’s first product, is a web browser add-on that automatically tracks and visualises the various paths people take as they follow their nose through any form of online research.

The obvious application for such a product is the education market, which is exactly where Twingl and the company’s backers are taking the product first.

Andy Wilkinson, Twingl’s founding chief executive, was in the late stages of a multi-school pilot programme and on the verge of launching a nationwide school holiday Minecraft competition when he took time out to explain how Trailblazer takes the donkey work out of documenting the research process.

“Trailblazer makes your learning visible. Say you’re researching something new – it might be a paper at uni or an overseas holiday – and you end up with dozens of open browser tabs, bookmarks and a Word document full of notes, well we’ve built a browser extension that turns all those tabs into a map which shows you why that tab is open and where to go next. It also automatically organises the notes you take. And in schools, your teacher will be able to see your map as well, so they can become better at teaching you how to research more effectively online.”

Wilkinson’s belief that humans are spatial thinkers kicked off the idea for Trailblazer.

“The internet doesn’t give you a very good sense of space, it’s almost edgeless in a way and anything we can do to help shape and adapt that content to the way our brains actually work is a good thing.”

Twingl itself is a product of New Zealand’s flourishing startup ecosystem, beginning with Wellington Startup Weekend in 2013 and progressing to theLightning Lab business accelerator programme this year, where Wilkinson and his fellow co-founders, Greg Signal and Matt Kennedy, raised $100,000 in seed funding to develop Trailblazer.

Angels lifting the Far North higher

The Angel Assn, with backup from Ice Angels is delighted to support the creation of an angel network in Northland.Northland start-up companies could now get their hands on investments of up to $100,000 as an Angel Network is ready to spread an investment mantle across the region, with up to 20 high net worth investors poised to give wings to new business. Christine Allen looks at the Dragon’s Den style divine intervention blossoming in the region

There is nothing supernatural about the investors that will consider the business pitches of two Northland companies next month – they just have the capital that start-ups need and are hungry for some tasty returns.
The New Zealand Angel Association is operating networks in Auckland, Tauranga, Wellington and Queenstown, connecting investors with early stage companies.

Through Ice Angels in Auckland, economic development group Northland Inc has so far engaged up to 20 investors in Northland.

Two Whangarei companies, and one from Auckland, will face the panel of Northland angels in October. The companies have IT-based pitches and have been working with Northland Inc to perfect their applications before meeting investors.
Their training has focused on due diligence, business opportunities and presentation skills.
Suse Reynolds, executive director of the New Zealand Angel Association, said individual angels invest between $5000 and $100,000 in any one deal.

They often have up to 20 deals on the go at any one time and accept that 50 per cent of deals will flop.
“Angel investing is such a powerful thing to do for a local economy.
She said some angels preferred to remain under the radar.
“But others are very happy to be ev-angel-ists for the cause.”

Mostly, they are looking for a meaningful return. The association offer networks and also funds, which companies can apply for, with or without opportunities for mentoring and strategic influence.
Currently, angels must earn a net $200,000 per year for over two years or have access to assets worth $2 million or more.
Financial Markets Authority reforms would soon allow smaller investors to come on board, thus expanding angel networks for smaller deals.

Technology is one of the network’s preferred areas of investment. Networks are also accredited with the Seed Co-Investment Fund, allowing for potential for qualifying transactions to receive the matching Government funds.
Joseph Stuart, general manager of business growth at Northland Inc said as 25 per cent of New Zealand’s top 50 rich listers had homes or holiday in the east coast of Northland, we have plenty of angels.
Mr Stuart said Northland offered an attractive lifestyle to business people, which was perhaps why we had so many potential investors here.

“Lots of wealthy New Zealanders come here on holidays, but have they been approached to become investors and mentors?
“Yes they are on holidays, but businesspeople love a good investment opportunity.”

The power of angels and accelerators propelling a high growth start up onwards and upwards

Software start-up CoachSeek raised more than $450,000 after going through the Lighting Lab accelerator programme, and plans to knuckle down and develop its product before ramping up marketing efforts.

The Auckland-based start-up, whose software helps sports coaches manage their programmes, raised more than its targeted $450,000 from a syndicate of angel investors through Ice Angels and AngelHQ, chief executive Ian Bishop told BusinessDesk, without being more specific. CoachSeek made the pitch for funds at Lightning Lab’s May demonstration day, with $100,000 already committed at a pre-money valuation of $1 million.

Serial entrepreneur Linc Gasking acknowledges the power of exits to fire more great NZ startups

Wellington startup 8i, whose virtual reality technology uses the Oculus Rift headset to immerse viewers in the entertainment they’re viewing, has secured a million dollars of new investment to seize on what it calls a huge global commercial opportunity.

Interested in learning what the Canadians are up to? They have introduced a new visa to attract angel and entrepreneurial talent

Canada’s Citizenship and Immigration Minister, Chris Alexander, met with Kitchener-Waterloo-based business incubator Communitech and other business leaders to discuss the Start-up Visa and its potential for attracting entrepreneurs to Canada who have the vision and ability to build innovative companies that can create jobs and long-term prosperity.

The roundtable aimed to build on the momentum of Alexander’s visit to GrowLab Ventures in Vancouver last month, where he welcomed the first two successful applicants under Canada’s Start-up Visa Program. Alexander discussed the importance of the program with a number of local business leaders and encouraged organizations to continue their efforts in identifying exciting start-up opportunities, as well as the dynamic entrepreneurs behind them, with the help of the Start-up Visa.

$2.2m Investment from Angels for Lightning Lab startups

Five of the nine start-ups to go through Lightning Lab’s digital accelerator programme have raised a combined $2.2 million of seed funding, more than what they were seeking at a demonstration day in May.

The five successful groups, Common Ledger, Cloud Cannon, GlassJar, CoachSeek and Twingl, were seeking $1.94 million to support the commercial ambitions for their respective software-based ideas, of which $740,000 had already been committed before their May 28 presentations. Lightning Lab’s programme seeks to prepare early stage companies to pitch to investors.
“I was delighted to see that all the teams who pitched on Demo Day 2014 matched the best of what last year had to offer,” angel investor Trevor Dickinson said in a statement. “It was therefore no surprise that the 2014 graduates have attracted serious interest from experienced angel and venture capital investors.”

Last month the government-backed New Zealand Venture Investment Fund said it was too early to judge the success of its Seed Co-Investment Fund, which backs early-stage firms alongside angel investors and was set up in 2006.

In the opening address for the Lightning Lab event in May, Angel Association chairman Marcel van den Assum, who was also part of the successful sale of local software firm GreenButton, urged angel investors to broaden their portfolios if they wanted to improve their chances of a return, with too many backers relying overly on a small number of ventures.

Angels help Irrigation idea find fertile ground

The world is running out of water. Demand has grown a staggering 60 per cent every decade for the past 50 years, says Isaac Bentwich, chief executive and chairman of a new Wellington-based irrigation software company.

An Israeli-turned-Kiwi entrepreneur, Bentwich should know, hailing from one of the planet’s drier regions. So perhaps it’s not surprising he was struck by the potential of the technology of his company, Varigate.

The concept is simple, he says. Land is not homogeneous, and hence water absorption and its availability to plants varies greatly across a field.

“Current irrigation systems waste a lot of water because they water fields evenly. Our uniqueness and focus is on ‘listening to the ground’, and providing each part of a field with exactly the right amount of water that it needs, at any given time.”

Varigate’s software technology works with automated irrigation systems to adjust spray levels in response to sensors in the ground, reducing the water needed to irrigate large fields by up to 20 per cent.

Bentwich stumbled across the seeds of Varigate’s technology at Landcare Research when visiting New Zealand in 2010. Landcare was doing some pioneering work on the management of terrestrial biodiversity and land resources.

“Its highly advanced technological approach to eco troubleshooting was inspiring,” says Bentwich, a former commercialisation consultant for Auckland University’s commercialisation arm, Uniservices, and the founder and successful seller of two Israeli technology companies.

“When I first visited New Zealand I was wowed by the strength of innovation here, but I also saw that there was room for significant improvement in the commercialisation of that innovation.”

Determined to commercialise Varigate’s technology and requiring capital and support to do so, Bentwich hooked up with Marcel van den Assum, an early-stage company or “angel” investor and chair of the New Zealand Angel Association, through mutual friend Dean Tilyard, head of the Palmerston North-based business incubator the BioCommerce Centre.

The Varigate system requires the user to download a mobile app and position three wireless sensors in the ground. The sensors send readings to the Varigate cloud.

The patent-pending pattern-recognition analysis methodology coupled with the software then studies a field’s condition and soil structure to determine how much water is required for a specific part of a field and automatically instructs the irrigation system to water where it’s needed.

The user can study irrigation field maps on a cellphone and change settings as needed.

For farmers and landowners, the appeal is obvious, Bentwich says. It’s “simple, cost-effective and low-maintenance” because it solves the puzzle of how to make significant water cost savings while increasing crop and dairy yield.

Van den Assum was first struck by Varigate’s strong intellectual property (IP) portfolio and Bentwich’s impressive track record. “It’s New Zealand IP which is exciting, but I was also attracted by the aspirational story around the planet’s water shortage and the demands on water globally.

“Plus Isaac is someone who has the global expertise to commercialise it effectively. It’s a good proposition for investment in New Zealand but I believe it will get world attention from an investment point of view.”

Varigate raised more than $1.5 million from investors this year.

Small, privately owned farms are embracing the technology and form the backbone of the customer body, van den Assum says.

“But while New Zealand is at the forefront of agricultural technology innovation, the truth is water’s commercial value is still not appreciated here,” he says. “So Varigate is not going to build a significant revenue stream in New Zealand.

“It’s going to be enough to validate the technology and show customers to recognise its value, but the big markets are in the massive arid regions of USA, China and the Middle East.”

Both van den Assum and Bentwich agree it’s hard to argue against any innovation that helps to save the Earth’s haemorrhaging water stocks.

“More than 40 per cent of the world’s food is provided by irrigated agriculture,” Bentwich says.

Produced in conjunction with the Angel Association of New Zealand.

Watering can-do
• Varigate uses a mobile app and sensors in the ground to measure where water is needed and how much.
• Irrigation systems can then deliver water only to the areas that need it based on the soil structure and condition.
• Adjustments can be made using the app from anywhere.
• Described as simple, cost-effective and low-maintenance.

SCIF crucial to co-invest with Angels

A seed fund that has proved critical for co-investing with angel groups in promising Kiwi start-ups is close to running out of money and is asking for a government top-up until it becomes self-sustaining.

Already the New Zealand Venture Investment Fund’s (NZVIF) Seed Co-Investment Fund is facing constraints in who it now partners, given it has only enough cash to last less than another two years if it continues investing at its current level of $5.4 million a year.

NVIF established the seed fund (SCIF) in 2006 to support the development of formal angel investment – the next step beyond family, friends and high-net-worth individuals – in New Zealand. The way it works is angel groups apply to partner with SCIF and any private capital investment is then matched dollar for dollar by the government-funded SCIF, up to a half-million-dollar limit per company.

The fund has invested in 116 companies and spent a total of $29.93m of the Government’s $40m establishment capital.

Returns to date from the five companies it has exited – which include HaloIPT and Green Button – have brought in $3.6m. Although the fund is allowed to recycle those returns into new investments, it’s not likely to generate enough in the next two years to keep going without a further capital injection or a government underwrite.

NZVIF chief executive Franceska Banga said they were talking to the government now about further funding of about $20 million to $25m by 2016.

The fund should be on track to become sustainable from its returns by 2018 or 2019, said fund investment manager Chris Twiss.

“We have to get some certainty around the funding as we’re hamstrung at the moment in forming new partnerships and it’s impacting on our operations,” Twiss said.

The seed fund’s portfolio ranges from hi-tech robotics to healthcare, agri-tech to paint tinting technology and more than 40 per cent of investments are software related.

Banga said it was too early to predict overall investment performance as most of the companies were still at an early stage – averaging three years of investment. It takes on average seven to eight years for returns to come through.

As of last year the fund had about 20 per cent of companies that had failed or were no longer having additional funding by its investors, which is in line with the experience of overseas seed funds. Twiss said about 10 had been liquidated and a further 20 had just gone dormant, with investors deciding not to throw good money after bad.

These funds are inherently high risk, although the seed fund’s risk is lower through being diversified among its partners. Banga said the common thread among the non-performers included technology failing to live up to its initial promise, poor alignment between the founder and investors on the company’s future direction, not having the right capabilities within the company to make it grow, and being too slow to come to market ahead of competitors.

Although the fund kicked off in 2007, it took a while to establish partnerships with angel groups and make investments. It has partnered with 15 angel groups since its establishment…

Founders from nine startups, mostly online platforms and tools for both businesses and consumers, took the stage on May 2 , 2014.

The room was full of more than 100 registered investors amid supporters, sponsors, family and friends.

Offers totalling $3 million of investment have been made, including that from NZ Venture Investment Fund’s Seed Co-Investment Fund (SCIF).

Angel investors were joined by institutional investors and larger funds, showing a growing enthusiasm from the early stage investment community for the prospects put forward by the Lightning Lab.

Stefan Korn, CEO, Creative HQ: “This year we saw more teams earning revenue by Demo Day, and a greater sense of commercial acumen and business leadership on the teams – a big win for the programme as we look to expand beyond Wellington in 2015.”

Icehouse targets startups in more focused programme

The Auckland-based global business incubator will focus each year on a maximum of 25 small to medium sized enterprises, down from an annual average of 75.

“In the context of what we are trying to achieve, which is ultimately to create more jobs and create more wealth, it is an expansion. It is not really a contraction,” Icehouse chief executive Andrew Hamilton told BusinessDesk. “What we’re trying to do is dial up the startups that have great international potential that we can support with great expertise, networks and funding.”

Tech-based start-ups which can be developed and brought to market quickly will be the main focus for incubator programme, and there will be no requirement for the businesses supported to remain based in New Zealand, although part of Icehouse’s new focus is to create 25,000 New Zealand jobs by 2020.

Incubator merges with tech investment firm

Dunedin’s Upstart business incubator has announced its merger with early stage technology investment firm powerHouse Ventures.

The merger will provide seed funding and support for businesses within the research-based technology sector.

It follows a partnership between Upstart and the Christchurch-based powerHouse Ventures, which was announced in November last year.

Upstart, which is jointly owned by the Dunedin City Council, University of Otago and Otago Polytechnic, has been helping high-growth companies get started since 2004, by providing incubation and angel investment services.

It has a network of investors across the country and now has operations in Dunedin, Christchurch, Wellington and Auckland.

Startup – Angel Investment Intel shows growth

Angel investment surged in 2013 with a record $53.2 million invested into young New Zealand companies in 2013, reflecting growing investor confidence in the technology and innovation sector, according to New Zealand Venture Investment Fund’s chief executive Franceska Banga writing in the latest issue of Startup, the Young Company Finance Report.

Marcel van den Assum Chair of Angel Association New Zealand agrees. “The substantial increase in investment last year shows the enthusiasm angels have for supporting entrepreneurial endeavour and the economic value this generates. The high level of follow on investment re-enforces angels’ commitment to businesses with potential, and recognises that it takes time and effort to achieve results.”

Software & IT largest investments for New Zealand Angels

Angel investors pumped a record $53.2 million into 116 high-growth businesses last year as confidence returned to the technology sector.

New Zealand Venture Investment Fund chief executive Franceska Banga believed 2014 had started in a similar vein, saying the environment for young technology firms seeking funding was probably the best it had been in 15 years.

A form of hybrid investment that combined equity crowdfunding and angel investment might soon make it possible for non-professional investors to invest in startups alongside experienced “angels” and on the same terms, she said.

The investment by angel investors was up 80 per cent on a lacklustre 2012 and the highest since NZVIF began polling angel groups in 2006. The market had been boosted by the strong performance of companies such as Xero, SLI Systems, Orion Health and Vend, Banga said.

Angel Association executive director Suse Reynolds estimated there were about 500 individuals in New Zealand who could be classed as angels. Networks included a new one especially for female investors, Arc Angels, which has 17 members and has just made its first investment.

Angel investment grew 80 per cent to a record $53.2m last year.

There are believed to be about 500 angel investors in New Zealand. Software and IT services firm attracted almost half of the money invested.

About 80 per cent of angel investment last year was “follow-on” investment and 20 per cent were completely new investments.

“The Awards celebrate the tremendous work of research organisations turning clever science into commercial value. Our 2014 finalists are some of the best at this, developing a new wave of exciting innovation that will create new companies, products and servicesto grow our economy,” says KiwiNet General Manager Dr Bram Smith.

“Many exciting stories of research commercialisation success are not well known. By putting the spotlight on the people and research organisations changing the commercialisation landscape in New Zealand, KiwiNet aims to inspire others to similar success,” says Smith.

The 2014 KiwiNet Research Commercialisation Awards finalists are:
AJ Park Commercialisation Collaboration Award
– Eradicating bovine tuberculosis with TBfree New Zealand, (Landcare Research and TBfree)
– Titanium Technologies New Zealand (TiTeNZ), (University of Waikato, Callaghan Innovation, GNS Science, University of Auckland, the Titanium Industry Development Association (TIDA) and a number of industry partners)

The BNZ Supreme Award will be presented to the entry which demonstrates overall excellence in all core areas of research commercialisation.

The KiwiNet Awards judging panel comprises Dr Andrew Kelly, Executive Director at BioPacificVentures, Sharon Hunter, one of New Zealand’s best-known business women and Director of Hunter Powell Investment Partners, professional director and ex-Angel Association Chairman Dr Ray Thomson, and director and executive advisor Helen Robinson, the founding CEO of TZ1.Lead judge Dr Andrew Kelly says, “It’s great to see another strong new set of applicants this year,
demonstrating that innovation is continuous in this country. These innovations are important as the next generation of the science and technology successes our economy is now seeing like Xero, A2 and Pacific
Edge.”

Kelly adds that the bigger pool of entries has been stimulated by the expansion of KiwiNet, ‘which is now the driving force in research commercialisation in New Zealand.’

Paul Stocks, Deputy Chief Executive of MBIE’s Science, Skills and Innovation Group, says MBIE supports KiwiNet’s collaborative approach to commercialising innovative research. “Research commercialisation is vitally important for New Zealand, as it can be a major driver of economic growth. KiwiNet is helping to
create greater commercial outcomes from our publicly-funded research, which will benefit all New Zealanders.”

The Awards are the pinnacle of KiwiNet activities designed to build awareness and inspire research commercialisation success. Sponsorship support is provided by BNZ, Minter Ellison Rudd Watts, AJ Park, MBIE and Sciencelens photography.

BNZ director – value chain Jason Lewthwaite says New Zealand is increasingly recognised for its innovation, design and engineering which creates a huge opportunity for boutique products and services in overseas markets.

“The early stage innovation commercialisation that KiwiNet fosters combined with market contacts and experienced business partners such as banks and business organisations will allow New Zealand businesses to bring valuable new products and services to niche markets internationally.”All finalists will deliver a presentation in the final stage of judging on 11 June in Auckland. Winners will be announced at a reception that evening.

NZ angels – broaden your investment portfolios

New Zealand angel investors are backing too few start-ups and should broaden their angel investment portfolios if they want to improve their chance of a return, according to Angel Association chairman Marcel van den Assum.

The success of software companies such as Wellington-based Xero had helped foster an environment where start-ups can flourish, though local angel investors have been reluctant to expand their portfolios, van den Assum, who was part of the successful sale of local software firm GreenButton to Microsoft earlier this month, told an audience at the Lightning Lab demo day in Wellington yesterday.

PolyBatics initiates field trial of cutting edge ag-tech

PolyBatics, Inc., whose novel biobead platform offers applications for diagnostics, antigen delivery/vaccines, bioseparations and many other uses, today announced the start of field trials of a unique tuberculosis (TB) skin test based on the company’s bionanoparticle technology.

The Ag-tech field trial is being conducted over a next few months in New Zealand cattle under the leadership of TBfree New Zealand and the Hopkirk Research Institute. The DIVA skin test was developed in conjunction with Dr. Bryce Buddle, Adjunct Professor of Infectious Diseases, Hopkirk Research Institute and Principal Scientist, Infectious Diseases Team, AgResearch, using PolyBatics’ technology.

Dr. Paul Livingstone, Manager of TB Eradication and Research for TBfree New Zealand said, “We are pleased to be supporting this study using a cutting edge technology and in the process, reaffirming New Zealand’s place at the forefront of managing and eliminating tuberculosis in wild animals and in our farmed livestock.”

NZ leads Europe on University R&D Commercialisation

Unlimited’s report on Australasian University Research and Development Commercialisation puts New Zealand ahead of Europe but behind the US.

Professor Phillip Butler of Canterbury University and his son Dr Anthony Butler commends early stage funds for the role they play in catalysing ventures and bringing skills contacts and experience to startup ventures. “I’ve been in the university system for less than ten years, and even in that short time I’ve noticed a cultural shift,” Anthony says. “It’s no longer the view among academics that you only get involved in commercialisation to make money. There’s now a recognition that if you have a good idea or product and you want it to have an impact on society, then you need to take it through to commercialisation.”

Phil Butler says the development of technology transfer organisations such as Canterprise and UniServices at Auckland has been essential to help spinout companies like theirs get cracking.He is also of the view that New Zealand leads Europe on commercialisation, while lagging behind the US. “There are a variety of mechanisms out there now and I think that variety is a strength.”

Yet there is still plenty of room for improvement, according to the Butlers. The notion that the process of commercialisation involves two distinct phases in which the scientists step aside for the money men is a persistent fallacy, Anthony says.

Aussie Angel Investment research report launched

StartupSmart, an Australian news and advice resource reports that a North American investment research group plans to partner with an Australian angel investor network to reports on Australian private investment activity.

Representatives from the Angel Resource Institute (ARI), which publishes the quarterly Halo reports, and the Australian Association of Angel Investors (AAAI) will sign a contract and commit to expanding ARI’s research.

“ARI has worked with AAAI for years, and we are excited to formally partner with them on the Halo Report: Australia,” said ARI chairman Michael Cain in a statement. “Angel investing is a global market, and now our research will reflect that same internationalisation.”

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About Angel Association New Zealand

Angel Association New Zealand is the champion for early stage investment. We aim to increase the quantity, quality and success of angel investment in New Zealand and in doing so create a greater pool of capital for innovative startup companies.